Prediction Market Bets Banned for Staff in 7 States

Regulatory headwinds continue to strengthen for prediction markets in the US.

At least seven US governors have now signed executive orders barring state employees from using nonpublic government information to bet on prediction markets. Arizona Governor Katie Hobbs signed hers on July 9, joining California, Illinois, Maryland, New York, North Carolina and Wisconsin.

In addition, states have now won 19 of 23 judicial decisions in prediction market cases, according to gaming attorney Daniel Wallach, following July 20th's Washington ruling against Kalshi. Notably, the states are racking up these wins despite the CFTC siding with Kalshi, arguing federal law preempts state gambling enforcement.

A Venezuela Bet Set Off the Executive Orders

Hobbs' order designates all nonpublic information obtained through public service as confidential, and prohibits executive branch employees from using it to profit, avoid loss, or help anyone else do either on platforms including Kalshi and Polymarket. Violations can trigger dismissal, other sanctions and referral to law enforcement. Gavin Newsom was first, in March.

Per Arizona Capitol Times reporting, Newsom, Kathy Hochul, Wes Moore, Tony Evers and Hobbs all cited the same trigger: a Polymarket account that appeared to win more than $400,000 betting the US would invade Venezuela by January 31, later traced to a special operations soldier arrested in April.

Polymarket refused to pay out the account's "invade Venezuela" bet, ruling the operation was not an invasion, but its "Maduro out" and "US forces in Venezuela" bets resolved yes.

Six of the Seven States Are Already in Court With Kalshi

The orders arrive alongside a widening federal problem. The CFTC is in settlement talks with the longtime White House teleprompter operator Gabriel Perez over more than $100,000 in Kalshi winnings, and the operator has been placed on unpaid administrative leave. Kalshi itself suspended three congressional candidates' accounts in April for allegedly betting on their own races, fining them and banning them for five years.

Every state on the list except North Carolina is currently in prediction market litigation. Arizona's own 20-count criminal indictment against Kalshi was permanently blocked in May after a federal judge sided with the CFTC on preemption. North Carolina took the opposite route entirely, authorizing prediction markets through Senate Bill 257 in its state budget, the first state to do so. Arizona Supreme Court Chief Justice Ann Timmer confirmed on Tuesday that judicial branch employees are already covered by an equivalent policy.